Kampala, Uganda | URN | The Ministry of Finance has clarified the criteria and procedure taxpayers must follow when seeking remission of tax liabilities, stressing that the measure is reserved for exceptional circumstances and is not intended to shield businesses from ordinary tax obligations.
Finance Minister Henry Musasizi told Parliament on Tuesday that tax administration is primarily intended to ensure the efficient, fair and consistent collection of lawfully assessed taxes.
He said tax remission under Section 43 of the Tax Procedures Code Act, Cap. 343, can only be considered where the Uganda Revenue Authority (URA) is unable to effectively recover a tax liability because of genuine financial hardship, impossibility, undue difficulty or excessive recovery costs.
Musasizi said URA must first exhaust lawful recovery measures before a tax liability can be considered for remission.
These measures include early intervention, negotiating instalment payment arrangements, enforcement against assets, recovery from non-essential assets, offsetting tax liabilities against credits, deferred payment and, where appropriate, temporary suspension of recovery.
“Tax remission is an important instrument of revenue administration rather than an exception to the tax laws,” Musasizi said.
He added that it is exercised only in exceptional cases where continued recovery no longer serves the interests of sound tax administration.
Under Section 43, the URA Commissioner General may refer a tax liability to the Minister responsible for Finance if the authority determines that it cannot be effectively recovered.
The Minister must then be satisfied that the grounds for remission have been met before submitting the proposal to Parliament for approval.
Musasizi said the process begins with the taxpayer applying to the URA Commissioner General.
The application must provide details of the tax liability, the grounds for seeking remission, the amount being requested for remission and supporting evidence, including relevant financial, insolvency or asset information.
The Commissioner General evaluates the application and, where satisfied that the liability meets the legal threshold, refers it to the Finance Minister together with the supporting evidence, proposed amount for remission, reasons for the recommendation, fiscal implications and possible alternatives.
The minister reviews the case before submitting it to Parliament, which has the authority to approve remission of all or part of the tax liability.
Once approved, the remission is gazetted and implemented by URA. The Ministry said one of the key grounds for remission is genuine financial hardship, where continued recovery would cause serious and demonstrable distress that is disproportionate to the revenue likely to be collected.
Musasizi clarified that not every case of financial difficulty qualifies as hardship under the law.
He said temporary cash-flow constraints, reduced profitability, commercial inconvenience, a taxpayer’s preference to use money for business expansion or investment, dissatisfaction with a tax assessment, or simply unwillingness to pay do not constitute grounds for remission.
The clarification comes amid continued efforts by the government to strengthen domestic revenue mobilisation and improve tax compliance as it seeks to reduce reliance on borrowing and other sources of financing.
The Ministry said the remission framework is intended to balance revenue collection with fairness in cases where pursuing a tax liability would be impractical, excessively costly or unlikely to yield meaningful revenue.
Musasizi said the process is therefore subject to an objective and transparent assessment, with Parliament retaining the final approval authority.
The clarification also means taxpayers seeking remission must demonstrate that their circumstances meet the statutory threshold rather than relying solely on inability or unwillingness to pay an assessed tax liability.
The post Finance Minister Musasizi defends criteria for tax remission appeared first on 1:.
